Improved terms for $20bn debt roll-over deal a sign of the revival in Dubai's
fortunes.

DUBAI has refinanced $20bn in emergency aid that was provided as its construction industry almost collapsed during the depths of the financial crisis.

The agreement between to the Middle Eastern emirate, Abu Dhabi and the Central Bank of the United Arab Emirates was announced Sunday on state television service WAM.

The terms of the new agreement will see the facility extended for five years at a 1pc annual interest rate, lower than the 4pc which Dubai had been paying previously.

The roll-over covers a $10bn, five-year loan which was offered to Dubai by the Abu Dhabi government through two state-owned banks, and $10bn of five-year bonds which Dubai issued to the UAE central bank.

The agreement, which was revealed in The Daily Telegraph last month, will enable Dubai to continue spending heavily on infrastructure as it prepares to host the World Expo in 2020.

Dubai, one of seven emirates in the UAE, obtained the aid in 2009 after the global credit crisis caused its real estate market to crash.

Companies in the emirate, known as government-related entities (GREs), had loaded up on debt to help pay for investments or large construction projects, struggled as financing dried up globally.

Some analysts have said that Dubai and its GREs still hold total debt of around $100bn. The neighbouring emirate of Abu Dhabi, which is the capital of the UAE and has vast oil wealth, stepped in to bail out Dubai.

Dubai is now recovering strongly, with residential property prices up over 20pc last year and its stock market rallying about 140pc since the end of 2012.

The roll-over deal “reflects the positive developments that the local economy of the emirate of Dubai has seen in recent years”, said WAM.

Dubai, unlike many of its neighbours in the Persian Gulf, has little oil or gas wealth, and has instead focused on building its thriving local economy on international trade, real estate development and tourism. Ruled by Sheikh Mohammed bin Rashid Al-Maktoum, who is also vice-president of the UAE, Dubai is the second largest economy in the region after oil-rich Abu Dhabi